Investments that Will Bring You Joy

Putting money into things you love can fill your soul and your wallet. Here’s how to make your dreams pay off

Jean Chatzky
Photograph: Illustrated by Yuko Shimizu

ALMOST TWO years ago, my husband and I decided to invest in a Broadway show. We found a group that allows small investors to buy shares in a production for a minimum of $10,000 and got on the mailing list. For a few months, we received information on various shows: A Little Night Music with Catherine Zeta-Jones and Angela Lansbury; Leap of Faith (based on the Steve Martin movie) with Brooke Shields; and a ballroom-dance spectacular called Burn the Floor. We said no to the first two (Night Music because, although we love Sondheim, not everyone does, and Leap of Faith because I didn’t like the movie) but put $10,000 into the third. Why? It had two of the dancers from Dancing with the Stars, a huge hit. We thought that would be enough to make it thrive.

We pretty much figured wrong all around. Night Music made money for its investors. Leap of Faith tried out in L.A. and is currently being reworked for Broadway. And Burn the Floor? It opened but never caught fire. We haven’t seen a dime—and the last communiqué to investors doesn’t make it sound as if we will. “I think you’ll probably lose it all,” says Steven Baruch, a producer affiliated with Richard Frankel Productions (, the group we invested with.

Even though we lost our money, it was a thrill to be thatclose to the theater. There are certain investments—in wine, restaurants, art—that I lump into the category of “play money.” If you’re already funding your retirement and your kids’ college, if you’ve avoided massive debt and are willing to take a flier on up to 10 percent of your portfolio, why not follow your bliss? Especially if you invest in a way that maximizes your chances of making the money back—and then some.

If it’s grapes that get you going, there are two primary ways to buy in: by becoming involved with a winery and by acquiring bottles, storing them and hoping they appreciate. Though some investors choose option one, that’s a bad idea, says Joe Bastianich, owner of four wineries. The price of admission is higher than that of most “passion” investments (high five figures to low six at a minimum), and holding on to that money is extremely difficult. “If you want to make a small amount of money in the winemaking business,” he says, “the best thing to do is to start with a large amount.” In other words, he advises that you steer clear entirely.

The second way—buying investment-grade wines when they’re first put on sale (but aren’t ready to drink) and holding them—“is how you can make money,” Bastianich says. That’s not to say it’s easy. Choosing a wine to drink is about taste; choosing one to invest in is about finding a wine that will quickly appreciate in value. Websites like and Wine-searcher .com keep data on how much money wines have sold for recently, and has listings of wines for sale. You’ll see that returns on some fine wines have been in the range of 12 to 14 percent annually.

How do you identify those “hot” wines? Start with Bordeaux, says Ann Feely, vice president of wine sourcing and sales for Vinfolio. “It’s the one category that’s traded like a stock and has proven to appreciate reliably,” even through the recession. “In terms of the wine-investment world, Bordeaux is the safest.”

It’s important, when you’re learning this market, to understand that there are hidden costs beyond the wine’s purchase price. There’s sales tax (which ranges from none in Delaware and Montana to more than 8 percent in New York and Tennessee) and, if you buy at auction, a commission to the auction house. Then you have to pay for storage. Renting a professional space that provides the right conditions costs about $20 a month for 10 to 12 cases and heads upward from there.
When investing in wine herself, Feely requires proof of provenance—a paper trail documenting who owned the wine for how long and how it got from place to place. For older wines, she may also request photos of the storage room and the cooling unit, as well as a monthly record of the room temperature. Finally, she prefers to buy wines by the case (12 bottles), and for Bordeaux in particular, she looks for the letters OWC, an indication that the wine is in its original wood case.

You may also need to take out a homeowners’ insurance rider—-essentially a supplemental policy—to protect your investment against losses due to storage problems. (You need a homeowners’  policy even if the wine is not stored at home; your insurance company can advise you.)

Of all the dream investments, art is the most democratic. “Whatever your budget,” says Alan Bamberger, author of The Art of Buying Art, “you’ll find something to buy.” In fact, there are better returns on lower-priced works of art than on those that go for seven figures, according to the Mei Moses Repeat Sale Database. For example, art in the $5,000-to-$50,000 range produced an average annual return of 8.5 percent through 2010. Works priced from $50,000 to $1 million produced 6.9 percent, and those over $1 million, 4.4 percent. (Find more about the performance of art as an investment at

Tempting as it may be to believe the pitch, avoid galleries that hawk so-called great investments, like Picasso prints, because of huge markups (sometimes as much as 90 percent of what you pay). Instead, start with work you like; art is fairly illiquid, so you may end up admiring it over your couch for a long time. Narrow your choices by examining the artist’s résumé, generally available at any gallery where his or her work is sold. Be wary of artists featured solely in international collections. Ask: Whose collections? When and where were the shows? Are the galleries reputable and established? Also watch for gaps in productivity. “You want to be sure the artist is in it for the long haul rather than dabbling,” says Bamberger. “A large body of work tends to produce better sales because a gallery is more interested in promoting an artist with 500 works than one with five.”

Hit the Internet to gauge the price range of the artist’s work, then use that information to negotiate with galleries and dealers. And when you’re starting, avoid auctions, where you’ll be competing against professionals. “Until you’re educated,” Bamberger says, “it’s like stepping into the ring with a pro fighter when all you’ve done is watch boxers on TV.”

“If the whole idea is that you always want to be able to score a reservation, stop right there,” says Bastianich, who has opened more than 20 restaurants with his partner Mario Batali. “Vanity restaurant investments never make money.” Instead, when you’re looking for a partner, search for someone who is opening her first or second restaurant—that way, you know she’ll be the one in the kitchen. You can also check out the website of the National Restaurant Association ( as well as Nation’s Restaurant News (
And remember, a restaurant is a business. “You have to figure out what it’s going to cost to open, run and, realistically, how much revenue you can produce,” says David Robkin, a -private-equity investor. Here’s how deals typically work: “A chef will start by raising a few hundred thousand dollars from family and friends,” says Robkin. “They form a limited partnership and arrange how to split the profits between the chef-owner and the investors.” There’s no standard business arrangement, but often initial investors get their money back plus interest, and then the chef-owner and investors split the rest fifty-fifty (or whatever percentage they’ve negotiated). “Because of the limited life of restaurants,” says Robkin, “investors usually want to see their money back within three years.” In Robkin’s investments, he shoots for a minimum return of 20 percent annually: “If you can’t figure out a way to make that much, you should find other things to do with your money.”
Yes, the risks are high. Three out of five restaurants close within three years of opening. Also, “it’s very hard to get your money out,” says Robkin. “If you’re in a partnership, you may sell your share to someone within the group, but it’s hard to sell it outside the restaurant.”

Finally, more on investing in the theater. I would do it again, but this time with lower expectations; now I know that only about 20 percent of Broadway investors make back their money. I would also think harder about whether I wanted to invest in a revival or a new show. Revivals, which tend to be beloved, have a built-in fan base and so are inherently less risky. What new shows offer is subsidiary rights: When you buy into that production, you also buy into all subsequent stagings. So when a high school in Montana puts on a production five years from now, you’ll get a check.

To find the right show, says theater producer Ken Davenport, become a regular reader of and You’re looking for posts about plays that are holding their first readings, which are intended to lure investors (contact information is usually provided). Another method, he suggests, is to look for the names of producers you like, Google them and ask to be put on their e-mail or investor lists (but watch out: Some require a minimum investment of $10,000 to $100,000).


Jean Chatzky, More’s consulting money editor, can relate: She has kids, a husband, a mortgage and an aging parent. She knows just how far you need your money to go.

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First Published Thu, 2011-07-28 15:07

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